In fact, the number of indoor waterpark hotels has grown by more than one-third during the past five years to 108 properties with 19,269 guest rooms, according to Hotel & Leisure Advisors. Our sample includes about 53 percent of those guest rooms.

Good news aside, indoor waterpark resorts don’t operate in a bubble, and there’s no denying that the weak economy has been a factor in profits this year. The first five months of 2008 were not particularly kind to indoor waterpark hotels in general, with steep declines in all three typical measurements: occupancy, average daily rate (ADR) and revenue per available room (RevPAR).

Overall occupancy for indoor waterpark hotels through May was 51.6 percent, up from 48.9 percent in 2007. Overall ADR was $94.66, down from $95.36 during the same period in 2007. Meanwhile, total RevPAR for indoor waterpark hotels through May was $48.86, up from $46.67 during the first five months of 2007. However, the peak summer travel season is only just completed. Those final numbers undoubtedly will change the forecast and, fortunately, it’s looking good.

So what are the current strengths and weaknesses? Here’s a closer look at the numbers and some of the trends affecting performance.

By the numbers
Through May 2008, the growth in weekday (Sunday through Thursday night) business at indoor waterpark hotels outpaced the growth in their weekend business (Friday and Saturday nights). Weekday occupancy at indoor waterpark hotels during the first five months of 2008 stood at 46.8 percent — a 7.7 percent increase from the same time frame a year ago (43.3 percent).

Weekday ADR during the first five months of 2008 stood at $89.82 — up 0.9 percent from $89 in 2007. That’s an 18.3-percent increase from the weekday ADR five years ago ($73.34). Meanwhile, weekday RevPAR through May was $42.02, grew 8.7 percent from $38.65 in 2007 — up more than 25 percent from five years earlier ($31.28). As indoor waterpark hotels continue to drive weekday corporate business, they also should be able to continue driving up their ADRs.

The surge in weekday business can be attributed to several factors, one being the fact that growing numbers of indoor waterpark hotels are taking business travelers more seriously, adding more meeting and convention space. The sector now has more than 1.6 million square feet of meeting space — nearly triple the amount of meeting space it had five years ago.

The increased pricing power on weekdays also can be traced to longer stays. With higher gas prices and fewer people traveling by airplane, along with bigger and better indoor waterpark features, vacationing families are using these hotels as destinations more and more.

Weekend occupancy through the first five months of 2008 stood at 63.5 percent, a 0.4 percent increase over the same period a year ago. Weekend ADR is $103.40, down 3.1 percent from $108.20 in 2007, though it is a 20.3 percent increase from the year-to-date weekend ADR in May 2003 ($82.36).

The weekend RevPAR performance shows a similar trend. During the first five months of 2008, weekend RevPAR was $65.65, down 2.7 percent from $67.50 — but it’s a 23.9 percent rise over the weekend RevPAR through May 2003 ($49.95).

The dip in performance numbers could reflect the increased competition within the indoor waterpark hotel segment. With more supply, operators in many cases need to be more creative with weekend packages to attract families looking for value propositions.

Driving forces
One thing that’s likely affecting weekend travel is high gas prices. With gas costs at near-record levels, travelers are going shorter distances for fun. Indoor waterparks are generally drive-to destinations, but the advantage for indoor waterpark hotels over traditional theme parks is that they have a 12-month operating season, rather than just the summer months.

With a slowing economy, consumers are demanding more value for their buck and most attractions are feeling the pinch as much as consumers. For example, as theme parks are cutting admission prices and offering more packages, they are appealing to families that have limited funds. In the past, families often went to markets such as Sandusky, Ohio, and visited Cedar Point amusement park, staying a couple of days at an indoor waterpark hotel. Now they’re having to make a choice between the two.

Additionally, a 3.3 percent, year-over-year rise in ADR indicates that leisure travelers are dealing with aggressive hotel operators, but they’re requiring them to provide more amenities as part of their rate.

International travelers also may be a factor. With the July 4 holiday providing the backdrop for an uptick in business for the lodging industry, when final figures are in, the second half of summer 2008 could produce a substantially better performance for the lodging industry than the first. Because the majority of the indoor waterpark hotels are located in Northern states, they tend to attract a large number of Canadian travelers because of the Canadian dollar’s strength against the dollar.

As the indoor waterpark hotel sector of the lodging industry continues to make its presence known, competition is becoming more prevalent in many markets, and managers must be more careful than ever in establishing daily rate structures. By knowing the trends of the industry and the habits of consumers, you can definitely make hay — even if the sun isn’t shining.